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Advisor Rejoins RBC 21 Years After Going Indie

On Wall Street (Online)

When Wayne Schluchter left the employee channel to go independent 21 years ago, the term “breakaway advisor” wasn’t even part of the industry’s vocabulary.

But while hundreds of wirehouse advisors have gone independent in recent years, technology changes and the burdens of running a business have prompted Schluchter to rethink his positioning in the industry.

As he leads his $500 million team back to RBC, is he ahead of the curve again?

“I think there are more people like us,” says Schluchter who foresees a counter trend movement of indie-to-employee moves.

So far, such moves are rare.

Since January 2014, more than 730 advisors have left employee brokerages to open independent practices, either with IBDs or as RIAs, according to BrokerCheck records and recruiting data analyzed by On Wall Street. That wave of breakaway brokers oversaw more than $126 billion in client assets at their former employers.

Fewer than four dozen advisors overseeing $4.4 billion have gone in the opposite direction during that same time period, according to the data. It does not include all advisor career moves as some firms do not publicize new hires.

Being an independent advisor has its unique challenges, such as finding capable staff, Sarch says. And advisors running RIAs may face more hurdles than those at IBDs.

Still, plenty of advisors find reasons to ditch their W-2 status. Independent broker-dealers like Commonwealth, Raymond James and Ameriprise, have picked up a number of wirehouse and other employee advisors who say they are seeking greater flexibility in how they run their practices.

“I think it’s maybe more specific to him and how he wants to spend his time,” recruiter Danny Sarch says of Schluchter’s move.

Indeed, Schluchter praises the “high quality” staff at his former IBD, Commonwealth Financial. But a number of trends in the business caused Schluchter to rethink his team’s positioning.

First, they wanted to get more of their time back, he says. As an example, he points to the workload of his colleague Kim Thyen Nies, senior investment associate.

“I was naive to think she spent 10-15% of her working hours during the month on the business. That’s HR, payroll, quick books, accounting. But the reality was that was closer to 50%,” he says.

Moving back into the employee brokerage model will relieve her of a number of those responsibilities. For the team overall, the move “will allow more resources to be put back in the client’s court,” Schluchter.

Though the team’s move is unique because of what they left behind, they are not alone in relocating their practice to a regional BD. RBC, Stifel and other smaller brokerage firms have been on a recruiting tear, picking up a number of mostly wirehouse brokers with promises of robust digital offerings and less bureaucracy than their bigger competitors.

Indeed, Schluchter pointed to how larger firms can use their scale to develop strong technology offerings and integrate them well with existing systems.

“That’s a big deal. And it’s about how we service clients in the end,” he says, adding that his team looks forward to using RBC’s portfolio analytics tools.

The group has also plans to expand, a feat easier to achieve with the support of an employee brokerage, he says.

The separation from Commonwealth appears to have been amicable.

“The Schluchter Investment Advisors team chose to depart from Commonwealth and we wish them all the best in their new endeavor,” a spokeswoman for the company said in a statement.

Schluchter says the team spent almost two years considering their options. And since making the transition on Sept. 14, team members have put in 12 to 14-hour workdays.

“There is no advisor in the world who says, I would like to move my business from one broker dealer to another,” Schluchter says, laughing.

Schluchter has a long view on the business. He joined the industry in 1987 working alongside his father, who was also an advisor, at RBC predecessor firm Dain Bosworth. His father introduced to the business when he was a child.

“Back in those days, we listened to AM radio and got the market report on the hour. That was my exposure to the industry,” Schluchter says.